BILL ANALYSIS


C.S.H.B. 650
By: Campbell
Business & Industry
Committee Report (Substituted)

    

BACKGROUND AND PURPOSE 

Current law allows for the expiration of gift certificates and gift cards.
There are some people who feel this puts Texas consumers at a
disadvantage.  In addition, there is no law  requiring businesses that
issue gift certificates to disclose certain information about its value.
Many times consumers purchase these gift certificates or "gift cards" not
knowing that the certificate loses value over time, has an expiration
date, or there are transaction fees charged after a certain amount of
time.  
The Committee Substitute to House Bill 650 would prohibit the expiration
of gift certificates and gift cards before the second anniversary of the
date on which the card was issued.  Gift certificates and cards that meet
certain requirements would be allowed to expire before the two year
anniversary. CSHB 650 would also require these businesses and card issuers
to disclose certain types of information on or with the gift certificate
or gift cards. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency, or
institution. 

ANALYSIS

CSHB 650 defines gift certificates to include only those gift certificates
that are sold or issued by a person offering goods and services.  The bill
states that a person may not issue or sell a gift card that expires before
the second anniversary of the date on which the card was issued.  Gift
Cards that state the expire in 10 point font and meet the following
standards may expire: 
1.)  a gift card that is issued under an awards, loyalty, or promotional
program without the       consumer giving money in exchange; 
2.)  a gift card that is sold below face value at a volume discount to an
employer or a                  nonprofit or charitable group for fund
raising purposes, if the expiration date is not more       than 30 days
after the sale;  
 3.)  gift cards issued for food items.

CSHB 650 would also require disclosure of reduction in value of a gift
certificate.  The disclosure must be located on either the certificate,
the envelope covering the certificate, or the receipt given to the
purchaser.  A gift certificate that does not clearly state a condition
described by this bill may be redeemed at any time for the original value
of the certificate, less any amount charged against the balance of the
certificate by the consumer. 

EFFECTIVE DATE

September 1, 2003.

COMPARISON OF ORIGINAL TO SUBSTITUTE
C.S.H.B. 650 78(R)          HB 650 exempted all gift certificates that did
not meet a select criteria from expiration.  CSHB 650 exempts gift cards
and certificates from expiration for two years, after which point the gift
cards may expire.  Gift cards and certificates that meet certain criteria
may expire before the second anniversary of the date on which the card was
issued.  CSHB 650 also defines gift certificates in a manner which will
exclude gift cards issued as a payment instrument by credit card
companies.  It also requires disclosure of reduction in value of the gift
card, and allows the consumer to recoup the balance remaining on the
certificate if the reduction is not disclosed.